To Develop Is to Retain

Now that the effects from the deepest recession in 70 years are receding, employers are slowly adding new employees. The problem is they also may be losing some of their best and brightest.

Avoiding turnover completely is unlikely, as it may not be easy to enhance salary or benefits. But chief learning officers can mitigate the exodus by promoting development strategies to retain the workers they can least afford to lose.

According to the U.S. Department of Labor there were 3 million job openings on the last business day of April, a slight decrease from 3.1 million in March. Yet high unemployment rates linger, and many organizations remain cautious about hiring. That hasn’t hampered job seekers, however. In a press release detailing why managing talent will be even tougher in 2011, Douglas Matthews, president and chief operating officer for Right Management, a talent management company, said more than 80 percent of workers may now be actively seeking new jobs.

The Cost if They Leave

For many employers a little turnover isn’t necessarily bad news. Some executives reason that voluntary turnover is unavoidable and may serve to clear out low performers. That may be true, but the real cost should not be underestimated.

Losing talented employees is a bottom-line issue. Considering replacement expenses such as covering each vacant position, plus the cost to recruit, hire, train and orient replacement workers, turnover can cost an organization 50 to 150 percent of an employee’s annual salary.

“The immediate costs of losing talented employees is significant and can be quantified relatively accurately,” said Lisa B. Peters, chief human resources officer of BNY Mellon. “The long-term costs are more difficult to calculate, and they can have serious consequences. The impact of losing top talent at any place in the leadership pipeline may not be felt for years, but such losses truly limit an organization’s ability to fill critical roles and, ultimately, compromise a company’s competitive position.”

The Mechanics of a Development/Retention Strategy